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Source link: http://archive.mises.org/18620/team-owners-capitalism-for-thee-but-not-for-me/

Team owners: capitalism for thee but not for me

October 6, 2011 by

One of the benefits of the present depression is the fact that the voters are grumpier than usual. It’s hard to care about your carbon footprint when you don’t have a job, and it’s now even possible to criticize the federal reserve without being deemed insane. Yet now, even the most hallowed government-corporate scheme of all, taxpayer-funded sports facilities, are under attack.

The New York Times reported on Tuesday that the Minnesota Vikings are facing opposition to the latest plan for a massive-taxpayer funded stadium.

To their credit, the Vikings have been so far avoiding the making of threats to leave town if they don’t get their way. The usual narrative is this:

Billionaire team owners: We wanna new stadium!
Taxpayers: Well, I dunno, I can barely afford to pay my bills.
Billionaire team owners: Give us what we want or the local economy will implode. Do it now!
Government representatives (to taxpayers): Approve this tax increase now, or I won’t look as hip and cool at the next National League of Cities meeting.
Taxpayers: Gee, I don’t want to destroy the local economy. OK.

The end result is that, yet again, the politically-well-connected wealthy once again enrich themselves at the expense of the middle-class taxpayer.

One of the masters of this was George Steinbrenner, who made a long career out of fleecing the taxpayer to make his Yankee empire more profitable (for him). Amazingly, when Steinbrenner died last year, he was hailed as an free-market entrepreneur. He was an entrepreneur of sorts, of course. He was quite entrepreneurial at using the political system to transfer funds from taxpayers to his pockets.

Raymond Keating at the Colorado Springs Business Journal wrote one of the more insightful columns on the Streinbrenner method of wealth creation:

While George Steinbrenner made Yankee fans very happy with seven World Series victories during his ownership tenure (with the two next closest teams, the Cincinnati Reds and Oakland A’s, winning three each), that does not mean he was a free-market, entrepreneurial capitalist.

Why? Steinbrenner was on the government dole. He received, benefited from and lobbied for handouts from the taxpayers. I speak, of course, about Yankee Stadium.

During the 1974 and 1975 seasons, the Yankees played in Shea Stadium while the original Yankee Stadium was gutted and rebuilt. The taxpayers picked up the tab, which was originally estimated at $24 million but ballooned to more than $113 million. Yet, by the late 1980s, the brazen Steinbrenner was lobbying for a new ballpark.

He got his wish when Yankee Stadium III opened in 2009. Often billed as being privately funded, nothing could be further from the truth. The New York City Independent Budget Office put the public costs at $855 million of a widely reported $1.5 billion total cost. But Neil deMause, co-author of Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit, put the total cost of the Yankee Stadium project at $2.3 billion, with the taxpayer share at $1.2 billion. That’s still not the full picture, though, as the Yankees’ PILOTS (payments in lieu of taxes) to New York City are used to pay off the tax-exempt bonds used to construct the ballpark. In effect, the Yankees’ de facto property taxes pay off the team’s mortgage. Few businesses get such a sweetheart deal.

The late Edmund Opitz explained in The Freeman magazine many years ago that once a business accepts a government handout, “it is no longer a business; it’s a hybrid which deserves criticism as an unethical aid on the public treasury.” He continued: “A businessman per se operates within the framework of rules laid down by ‘the market’; when he operates outside this framework, and by a different set of rules, he is something other than a businessman.” Indeed, he becomes a ward of the state.

And this tradition continues with the Vikings of course, although unlike the Yankees, the Vikings are a lousy team.

None of this necessarily implies, however, that professional sports themselves couldn’t flourish without taxpayer support. The larger problem is that the taxpayers and the government officials who help swindle them, seem to actually buy the mercantilist philosophy behind the modern idea of “Economic Development” which is that growth in local economies depend on taxpayer subsidies and sweetheart deals for private corporations. The mere suggestion that the economy should be allowed to grow freely and on a level playing field is met with absolute disdain from Chambers of Commerce and local government officials in every corner of the country.

“Why, if we didn’t subsidize big business,” they say, “why would anyone ever start a business here?” Lower taxes and fewer regulations might be a good start, of course, but see how far that gets you with the city council.

{ 15 comments }

terrymac October 6, 2011 at 12:44 pm

I am a native of Pittsburgh, where voters opposed stadium taxes by a 2:1 margin – and politicians simply ignored the voters.

I have recently moved to Charlotte, where the locals tell the same story: voters oppose tax-funded boondoggles, and politicians ignore the voters.

It’s Public Choice Economics 101 – politicians pay more attention to wealthy campaign donors than to voters.

Marissa October 7, 2011 at 8:15 am

Lucky you, TerryMac–they didn’t even ask us voters here in Austin if we wanted to have our money (and other state taxpayers’ money) stolen to fund an F1 track. I assume because it’s coming partly from a state fund which makes all the difference?

Becky Hargrove October 6, 2011 at 1:57 pm

That an economy should be allowed to grow freely on a level playing field and that this is actually discouraged by local Chambers of Commerce: thank you so much, this should be shouted to the rooftops because people do not realize how much aggregate growth is being lost in the present, and how dangerous that loss actually is. I get frustrated by the constant blame on government by people who see to it on a daily basis that others cannot set up businesses in their own towns. Mention the need for economic access to some, and they think you are talking about more redistribution of government funds to the lazy. But economic access is about finding ways so that we all can work as long as we want to for the course of our lives.

Roacho October 6, 2011 at 2:01 pm

A parallel of this scenario is playing out right now in Edmonton AB, Canada. Local pharmacetical billionare Darrel Katz is requesting that a new hockey arena (~$400 million) be funded by mostly taxes, or else he will move the team away. However, the Edmonton NHL franchise is one of the more profitable ones; no one with a brain believes his bluff.

The most sickening part of the proposal is the “community revitalization levy” (CRL) which will pay for $125 million of the cost. The logic behind the CRL is that the local business owners (Restaurants, etc) will benefit from the presence of this facility and must “pay up.” Elizabeth Warren’s brilliance is shared by municipal tax masters all over the place, and produces particularly virulent mercantilism.

Joe October 6, 2011 at 2:18 pm

I am amazed that anyone here would be surprised or indignant that individuals with wealth would leverage economic power into political power via rent seeking behaviors AND at the same time state that there needs to be less regulation.

Seems one solution would be to actually raise taxes on an individual basis…ie those individuals who give to political campaigns. ;-)

The best law to pass would be one BANNING any and all political contributions and all candidates being limited to monies paid from the public fisc.

Unless someone can show me where political caucuses are described in the constitution…we should ban the parties as well.

Daniel October 6, 2011 at 5:01 pm

Ideally we would have RSVP governments where, if you (rhetorical) want a stadium, then you pay for it

vc October 6, 2011 at 8:26 pm

Well, Joe, you are almost there.

However, your attempt to solve “the problem” ignores the real underlying issue-government. Even if your plan were successful in plugging up one or more avenues of influence, other ways to game the system would undoubtedly surface.

The real issue is the fact that the state can , by their own account, legitimately compel its citizens through the threat or use of force. As long as that ability exists, it will be used, period.

In fact, the entire purpose of government is to allow people to do things to others that would otherwise be unlawful or , if you prefer, a violation of their rights.

Jordan October 6, 2011 at 11:23 pm

The more regulation you have, the more lobbying you will have. I won’t give up my free speech rights to protect your beloved big government experiment.

J. W. October 7, 2011 at 2:20 am

“The best law to pass would be one BANNING any and all political contributions and all candidates being limited to monies paid from the public fisc.”

So we should respond to the abuse of government power with greater restrictions on individual liberty?

“Unless someone can show me where political caucuses are described in the constitution…we should ban the parties as well.”

The Constitution doesn’t describe chocolate sundaes so we should ban them too, I guess.

Jimmay! October 7, 2011 at 6:30 am

The arguments of “constitutuional conservatives” often begin anti-statist but by the time they have been wrapped up by the presenter its hard to distinguish them from other statists.

Joe’s idea of banning political controbutions beats around the bush. Realanswer: Ban politics.

Joe’s idea of raising taxes on an individual basis– the individuals who donate to campaigns– sounds a bit like an eat the rich campaign. Are we supposed to tax all people enough so no-one can afford to get a leg-up in the political arena? If so where is that in the Constitution?

I dontknow how Joe identifies himself politically but id say its safe to assume hes not a fan of Rothbard.

Julien October 6, 2011 at 4:14 pm

At least they didn’t pass a law preventing anyone from protesting the building or contract in a court of law like they just did in Quebec City. Now THAT’S corrupt, and the rethoric was exactly the same : “If we don’t pass this law and build that stadium with public money, no team will ever move here “

Mitch Kordonowy October 6, 2011 at 5:12 pm

I wonder, is the Barclay’s Center in Brooklyn tax-payer funded?

Aristippus October 7, 2011 at 6:30 am

Steinbrenner was a poor businessman – after all, he hired George Costanza.

Horst Muhlmann October 7, 2011 at 9:29 am

Steibrenner a capitalist? He’s a lot like Fidel Castro.

Castro

Steinbrenner

Josh Stettler October 7, 2011 at 10:53 pm

Here in Cincinati, ticket prices for the Reds and Bengals just increased to help pay the county’s debt from the stadiums. Increasing the sales tax, of course, fell far short.

In Major League Soccer, the Columbus Crew built a stadium that seats 20,000 with private money for under $30,000,000. With public money, Sporting Kansas City can seat 18,500 for a mere $200,000,000. Both metropolitan areas have just over 2,000,000 people. Government was able to be 1/7th as efficient as the private sector. This may be a new high for government.

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